Income Statements amounts given are in millions $2,720 $1,200 1,070 145 625 Balance Sheets Cash and Marketable Stockholders’ Equity Total Stockholders’ Equity Total Liab.. Cisco System
Trang 1ATC 1-1 (All dollar amounts are in millions.)
STOCKHOLDERS’
* Liabilities must be computed by subtracting equity from assets.
d Net sales increased by 2.3% from 2007 to 2008
($62,884 − $61,471) ÷ $61,471 = 2.3%
Cost of sales increased by 2.9% from 2007 to 2008
($44,157 − $42,929) ÷ $42,929 = 2.9%
Selling, general and administrative expenses increased by 2.2% from
2007 to 2008 ($12,954 − $12,670) ÷ $12,670 = 2.2%
The largest percentage increase was for cost of sales
Trang 2Income Statements (amounts given are in millions)
$2,720
$1,200
(1,070)
(145)
625
Balance Sheets
Cash and Marketable
Stockholders’ Equity
Total Stockholders’
Equity
Total Liab and Stk
items are discontinued items, change in accounting
principle, or extraordinary items.
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Trang 31 Cisco Systems issuance of bonds should be classified as a $4 billion
cash inflow in the financing activities section of the statement of cash flows.
$46.8 billion cash inflow in the operating activities section of the statement of cash flows.
$545.7 million cash outflow in the investing activities section of the statement of cash flows.
classified as a $1.2 billion cash inflow in the investing activities
section of the statement of cash flows.
expenditures should be classified as a $7 billion cash outflow in the investing activities section of the statement of cash flows.
Trang 4a The percentage growth from 2011 to 2012 was 67%
growth will probably not continue from 2012 to 2013
the lottery win If the company continues to grow at the current rate, shareholders should expect an increase in net income of approximately 15% This is the increase in net
$120,000 = 15%].
b One could assume that the $200,000 was used to pay off liabilities since the total liabilities were reduced by
$200,000 Also, assets and common stock did not change.
operations was 15% (see a above) Therefore, owners
could expect net income to be $158,700 ($138,000 x 115%)
in 2013.
d.
Machine Import Company Income Statement For Year Ended December 31, 2013
0 Operating Expenses ($552,000 x
Net Income from Continuing
0
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Trang 5Machine Import Company
Balance Sheet
As of December 31, 2013
-0-Stockholders’ Equity
Retained Earnings ($500,000 +
$118,700)
618,700
Total Liabilities and Stockholders’
Equity
$998,700
Trang 6This problem is designed to test written communication skills The memo should describe the balance sheet and the income statement It should explain that the balance sheet is a
statement of assets, liabilities, and stockholders’ equity at the date of the financial statement The income statement gives the amount of revenues and expenses for the
designated period The memo should also define each of the following terms:
Assets
Liabilities
Stockholders’ Equity
Revenue
Expense
Net Income
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Trang 7Financial Statements Income Statement
Statement of Changes in Stockholders’ Equity
Balance Sheet
Assets
Stockholders’ Equity
Statement of Cash Flows
Net Cash Flow From Operating Activities:
Net Cash Flow from Operating Activities 17,000
Net Cash Flow From Investing Activities
-0-Net Cash Flow From Financing Activities:
Net Cash Flow from Financing Activities 3,000
Plus: Beginning Cash Balance 70,000
Trang 8b In the short-run replacing Kevin would save $5,000 in
cash expenses Accordingly, net income, assets,
stockholders’ equity, and cash flow from operating
activities would increase These effects can be confirmed
by comparing the statements above (i.e., after effect of replacement) with those shown in the textbook (i.e.,
before effect of replacement) However, the long-run
impact may be different depending on how other
employees react to Kevin’s replacement If the
replacement creates resentment and low morale among the remaining employees, then productivity and
profitability may decline In this case, the company may experience a negative impact rather than the expected positive effect The best solution to this dilemma is
avoidance Kevin’s salary should never have been
permitted to rise above his value to the company As
future business managers, students should take heed of the perils of excessive generosity Employees should be paid on a basis that is consistent with their contribution
to the company’s profitability The pain of corporate
downsizing can be avoided if businesses do not oversize
in the first place.
1-108
Trang 9This solution is based on McDonald’s 2008 financial report.
2008.
net cash flow from operating activities were $5,917.2 million
net cash flow from investing activities were ($1,624.7) million.
net cash flow from financing activities were ($4,114.5) million.